Beshear says idea 'makes sense,' but it may wait

Jan. 24, 2013

Kentucky Gov. Steve Beshear (AP Photo/Roger Alford) / AP

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The Courier-Journal

Gov. Steve Beshear endorsed a constitutional amendment Wednesday that would allow local-option sales taxes, joining the mayors of Kentucky’s biggest cities and Greater Louisville Inc. in backing the concept to create a funding alternative for local projects.

“It makes sense,” Beshear said in Louisville during a luncheon put on by Greater Louisville Inc., the regional chamber of commerce.

A task force Beshear appointed on tax reform has endorsed local-option taxes, but Beshear had only said he was reviewing its suggestions.

Since last spring, Louisville Mayor Greg Fischer and Lexington Mayor Jim Gray have called for the state to allow counties to increase the 6 percent state sales tax and earmark the additional revenue for local public improvement projects. Fischer has said a 1-cent tax in Jefferson County would produce $90 million a year.

“With all the needs we have with our roads and sidewalks and infrastructure, that could take care of it pretty quickly because our general fund cannot,” Fischer said. “So the governor’s voice in this effort is really big.”

Under the concept being discussed, the tax would be submitted to voters in the locality where proposed, would be dedicated to specific projects and would have a sunset provision.

“This gives people the freedom to vote on investments,” Fischer said. “… It’s only new revenue if people want to vote it in on specific projects.”

Speaking at The Brown hotel, Beshear said he saw the benefits of local-option sales taxes on a trip he took — before he was governor — with Commerce Lexington to Oklahoma City, where the city’s downtown was revitalized with an arena and baseball stadium through a tax.

Beshear said he doesn’t believe areas that approve a local-option sales tax would be at a disadvantage in getting other projects funded by legislators, who might argue that the local tax also should pay for the project.

“I think the legislature would continue to look at individual projects that come down the road,” Beshear said. “My guess is you’d be doing a lot bigger things with a local-option sales tax than what we usually fund from the legislative standpoint.”

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Attorney General Jack Conway issued an opinion earlier this month that local governments could not enact a local-option sales tax unless the state constitution is changed.

The opinion was requested by Louisville Metro Council President Jim King and Councilman Ken Fleming.

Sen. Kathy Stein, D-Lexington, has filed Senate Bill 30, which proposes the local-option sales tax amendment. If approved by three-fifths majorities in the House and Senate this session, the amendment would be voted on in the next congressional general election which is in November 2014.

Fischer urged supporters to call legislators but said the major push to pass the amendment may come in next year’s 60-day session rather than in this year’s 30-day session, which resumes next month.

“If there was some kind of opening, we would take it,” Fischer said, “but we really see this as more of time for education of the General Assembly and (to) gather momentum and consensus around the state, and then make a big hard push for 2014.”

Stein said Wednesday that she will make a push for her bill — which has been assigned to the State & Local Government Committee — this year, but conceded the issue may wait until 2014.

But Beshear said Wednesday that he wouldn’t be surprised if tax reform doesn’t pass in this year’s regular session and suggested he would call a special session later in the year to address the issue if needed.

A local-option amendment would have to wait until 2014 because constitutional amendments can only be approved during a regular session.